LATAM Airlines Argentina announced an immediate cease of operations. According to the Argentinian branch, it will stop operating “until further notice.” Due to the current coronavirus pandemic, LATAM doesn’t see any viability or sustainable business in Argentina. Let’s investigate further.
What does it mean “until further notice”?
In a statement, LATAM Airlines Argentina said that it is stopping its passenger and cargo operations during an “undetermined amount of time.”
Meanwhile, the company started a legal measure called Procedimiento Preventivo de Crisis (PPC, roughly translated as Preventive Procedure of Crisis). This measure aims to stop any firing. Meanwhile, the company and the Argentinian Government will work together to reach an agreement regarding future firings. The carrier said,
“The impact that the coronavirus pandemic has had on LATAM Airlines Argentina and the difficulty of generating the necessary agreements to face the current situation created an extremely complex scenario. (In this scenario) we don’t have the conditions to sustain the operations of the branch in the long term.”
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LATAM Argentina was not part of Chapter 11
When LATAM Airlines Group filed for Chapter 11 bankruptcy in the US, it stated that its branches in Brazil, Argentina, and Paraguay were not involved. LATAM Brazil was out because it is looking for funding on its own. But there was no information regarding the future of LATAM in Argentina and Paraguay.
The Argentinian Government has delayed the opening of the airspace. International routes are set to begin in September. According to local sources, domestic routes will begin sooner, but there is no definitive date.
Now LATAM Airlines will stop flying from 12 Argentinian destinations. These cities are: Buenos Aires, Iguazú, Bariloche, Salta, Tucumán, Mendoza, Córdoba, Neuquén, Comodoro Rivadavia, Río Gallegos, El Calafate, and Ushuaia.
Meanwhile, the international passenger routes from Argentina will still be open. Other LATAM branches will connect Argentina with the US, Brazil, Chile, and Peru, the carrier said.
Who wins with LATAM Argentina’s exit?
LATAM Argentina was the second most important domestic operator in Argentina. In 2019, LATAM had 16% of the domestic market share. Aerolíneas Argentinas had 63% of the market share.
Last year, LATAM carried 3.1 million passengers. Weekly it transported over 500 tons of cargo and operated from 14 domestic and six international airports. It had a fleet of 13 Airbus A320 and nine Boeing 767.
With the withdrawal from the market, Aerolíneas Argentinas seems like the biggest winner. In a matter of weeks, it lost two competitors in the region. First, the Argentinian Government decided to merge Aerolíneas with the other State carrier, Austral. Then, LATAM Argentina announced the cease of operations.
Currently, there are other three carriers in Argentina. Two are low-costs (Flybondi and JetSmart) and one is Andes, a carrier that already has a lot of difficulties and it is not expected to survive.
But while Aerolíneas Argentinas can survive due to the help of the Government, the low-cost carriers have a dark outlook ahead. Both low-cost operators depend on the opening of the airspace but that is something that is yet to happen.
What do you think of LATAM Argentina’s exit? Let us know in the comments.